Arbitral Tribunal Cannot Abdicate Duty To Decide Limitation Objection Merely Because High Court Appointed Arbitrator: Allahabad High Court

"When the arbitrator chooses to abrogate and abdicate his jurisdiction and comes to a wrong finding that he does not have jurisdiction to decide a particular point contrary to principles established in law, the arbitrator at such point is acting in a patently illegal manner," Allahabad High Court (Lucknow Bench), in a significant ruling dated April 27, 2026, held that an Arbitral Tribunal is duty-bound to adjudicate on jurisdictional objections regarding limitation under Section 16 of the Arbitration and Conciliation Act, 1996.

A bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary observed that a Tribunal cannot refuse to decide such an issue on the pretext that the High Court’s order appointing the arbitrator has attained finality. The Court emphasized that the referral court's role under Section 11 is limited to examining the existence of the agreement, leaving mixed questions of law and fact to the Tribunal.

The dispute arose between partners of M/s Arch Construction regarding alleged illegal bank operations and forgery. Following a legal notice invoking arbitration in 2017, the respondent approached the High Court under Section 11 only in 2023, nearly six years later. After the High Court appointed a sole arbitrator, the petitioner filed an application under Section 16 challenging the jurisdiction on the ground of limitation. The Arbitrator rejected the application, claiming he lacked jurisdiction to re-examine the limitation of a Section 11 application once the High Court had made the appointment.

The primary question before the court was whether the High Court under Article 226 of the Constitution of India can interfere with an interlocutory order passed by an Arbitral Tribunal under Section 16. The court also examined whether an Arbitral Tribunal is required to adjudicate on the jurisdictional issue of limitation even after an arbitrator has been appointed by a referral court under Section 11(6) of the Act.

Scope Of Writ Jurisdiction Against Interlocutory Arbitral Orders

The Court acknowledged that the principle of minimal judicial interference generally restricts writ courts from intervening in interlocutory arbitral orders. However, it clarified that interference is warranted in "exceptional rarity" where a party is left remediless or where the order is so patently perverse that it stares the court in the face. The bench noted that a patent lack of inherent jurisdiction requires no complex argument and must be corrected to prevent a gross miscarriage of justice.

"This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties... the perversity of the order must stare one in the face."

The Doctrine of Competence-Competence Under Section 16

The High Court highlighted that Section 16 of the Act enshrines the doctrine of competence-competence, empowering the Tribunal to rule on its own jurisdiction. The bench observed that all jurisdictional issues, including whether the Section 11 application was filed within the limitation period, must be adjudicated by the Tribunal. It rejected the Arbitrator's reasoning that he could not revisit the issue because the High Court had already found a "live and subsisting dispute."

"The Arbitral Tribunal is the forum for deciding all issues that the parties may raise including the issues of limitation that may have not been raised by the parties at the time of order passed by the High Court under Section 11 of the Act."

Limited Inquiry By Referral Courts Under Section 11(6-A)

Referring to the 2015 Amendment, the Court stated that the jurisdiction of the High Court at the Section 11 stage is confined strictly to the "existence" of the arbitration agreement. It noted that the referral court is not expected to conduct a "laborious or contested inquiry" into mixed questions of fact and law like limitation. These issues are left open for the Arbitral Tribunal to decide upon a full appreciation of evidence.

"The duty of the High Court is restricted to examining the existence and validity of the arbitration agreement and nothing more... substantive objections pertaining to existence and validity on the basis of evidence must be left to the Arbitral Tribunal since it can 'rule' on its own jurisdiction."

"The logic of the Tribunal that since the matter has been referred by the High Court, the point of limitation cannot be re-looked into by the Tribunal is without any basis in law."

Tribunal’s Order Labeled Patently Illegal And Perverse

The bench found the Arbitrator's order to be inherently contradictory and perverse. While the Arbitrator had acknowledged that limitation is a jurisdictional issue and noted that the respondent's plea of "continuing cause of action" lacked force, he still declined to rule on the matter. The Court held that such an abdication of responsibility constitutes patent illegality, making the case fit for intervention under Article 226.

"An order that records a legal position, accepts it, and then acts contrary to it without any reasoning is inherently contradictory and completely perverse on the face of the record."

Final Directions To The Arbitral Tribunal

The Court quashed the impugned order dated October 9, 2025. It directed the Arbitral Tribunal to adjudicate the petitioner's preliminary objection regarding the limitation of the Section 11(6) application on its merits. The bench clarified that it had expressed no opinion on the actual merits of the limitation plea, leaving all contentions open for the Tribunal to decide expeditiously after hearing both parties.

The High Court concluded that the Arbitral Tribunal erred in law by relinquishing its jurisdiction to decide a preliminary objection. By setting aside the order, the Court reaffirmed that the principle of competence-competence is central to arbitration law and cannot be bypassed by misinterpreting the finality of a referral court's appointment order. The petition was allowed with directions for a fresh adjudication of the jurisdictional plea.

Date of Decision: 27 April 2026